1 Stock to Watch in Recreational Vehicles

Winnebago's top-of-the-line Grand Tour is a luxury home on wheels. But the company sells plenty of more modest vehicles, too. Source: Winnebago Industries.

Ever think of buying a motor home or a camping trailer?

If so, you might find recreational vehicles to be an interesting investing niche. While many folks seem to think the business of building motor homes and campers is a relic from an earlier time, it's actually a thriving market.

According to the Recreational Vehicle Industry Association, or RVIA, U.S. RV manufacturers shipped 356,735 vehicles in 2014, up 11.1% from 2013 levels.

That was an eight-year high, and the RVIA expects further growth in 2015. RV sales were up another 7.9% in the first quarter of 2015, and the RVIA thinks the industry's sales could hit a new record in 2016.

So, where are the investment opportunities? Here's a stock that might be an intriguing buy now -- but it might be an even better stock to watch for a bit, at least through its next quarterly earnings report.

It's time to watch Winnebago IndustriesWinnebago Industries , headquartered in Forest City, Iowa, builds the famous Winnebago and Itasca motor homes, along with RV trailers under the SunnyBrook and Winnebago brand names.

Its biggest motor homes ("Class A") are built on specialized chassis -- similar to the underpinnings used for buses -- that are fabricated in-house. These can be very luxurious and very expensive: Winnebago's top-of-the-line Grand Tour starts at a little over $425,000.

The posh interior of Winnebago's top-of-the-line Grand Tour motor home. Source: Winnebago Industries.

Smaller Class B and Class C motor homes are more affordable. They're built on heavy-duty truck frames supplied to Winnebago by Ford, Daimler, and Fiat Chrysler.

Sales and revenues for the company have been solid, but they've recently been less solid than investors would like. For the quarter ended Feb. 28 (Winnebago's fiscal second quarter), revenues grew 2.5% to $234.5 million, but net income dropped almost 16%, to just $8.1 million.

That was far short of Wall Street estimates, and Winnebago's stock got clobbered when the news was released on March 26, as you can see:

WGO data by YCharts.

From a five-year perspective, the story looks a lot better, with the stock price rising nicely along with Winnebago's sales and profits -- until the last year.

WGO data by YCharts.

That last year or so needs some explanation.

Were last quarter's results a blip, or a new trend?Winnebago's overall sales have been increasing, but its "mix" has been deteriorating, meaning sales of its most profitable products have been slipping.

Sales of Winnebago's "towables," its trailer campers, rose almost 12% last quarter. And pricing was strong, with average transaction prices up almost 8%. But revenues from motor homes grew just 2.4%, despite an 18% jump in retail registrations. (Translation: Dealers were selling down existing inventory.)

Worse for Winnebago, deliveries of the most profitable Class A motor homes fell 22%. Demand for smaller Class C motor homes was up significantly, but the hit to Winnebago's top and bottom lines was significant.

Sales of Class C Winnebago motor homes like this Ford-based "Minnie Winnie" model were up last quarter. But sales of the company's largest models fell. Source: Winnebago Industries.

CEO Randy Potts was optimistic that things will improve, noting that the company is working through some expensive upgrades he believes will pay off over time.

Not surprisingly given recent results, Winnebago's stock looks cheaper than it has been in a while, with a price-to-earnings ratio of around 13.

But will its sales -- particularly of lucrative Class A motor homes -- start to pick up steam as the spring and summer months unfold?

The upshot: Keep an eye on theupcoming earnings report That's the big question, and it's one I'd like to see answered before sinking money into Winnebago's stock.

Like any good company that hits a rough patch, Winnebago is worth a closer look. But I would wait until it releases its fiscal third-quarter earnings results later in June.

If those results show things starting to pick up, then it might be time to jump in, as long as shares remain relatively cheap. But until then, I think it's a stock to watch.

The article 1 Stock to Watch in Recreational Vehicles originally appeared on Fool.com.

John Rosevear owns shares of Ford. The Motley Fool recommends Ford and Winnebago Industries. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.